The Indian IT Services industry has been one of the wonders of the world over the last couple of decades, growing from nothing to $100 Billion in that time. However, today, the industry seems to be caught-up in it’s own success. With the loss of the cost play as a long term strategy, and the movement of the IT landscape towards everything on the cloud (the conclusions in this article by Phil Wainewright are a bit drastic, IMHO, but the points are valid), the industry needs to have a long hard look at what the future holds.
A recent event report by Ray Wang that talked about IP motivated me to flesh out my thoughts on this topic. Over the past few years, this has been an oft-repeated discussion with folks at multiple firms (mostly within the BFSI sector) with interesting thought patterns emerging.
There is a large amount of trepidation in these firms with regards to creating intellectual property. The few internally developed products have not provided the returns. Even the ones purchased externally are not hitting headlines. The ROI has just not compared with the returns coming from services making it a low priority in tough times. There is also concern about competing with the customer (the customer would not want to pass knowhow which could end up in the vendors own products). The firms just don’t seem to trust their knowledge levels, execution capability and selling skills enough.
To get around this, the vendors need to think outside the box.
One feature of enterprise software (especially internal software, which is bread and butter for the service industry) is the utter lack of thought put into user experience, and to an extent, sustainable design. Zia Patel has eloquently talked about how India can capitalize on its back room innovation skills to create IP. This niche can then be exploited by the industry to create a differentiation to their services as well as products.
Another thought is to work with the startups in India. I know of several startups which began with product roadmaps. To fund these fruits of passion, they began to do services. Now they are in the “next payroll syndrome” and are unable/unwilling to chase their dreams. With their strong balance sheets, the large companies can create an eco-system of co-dependency that will help both ends of the market. There is a start in this area, but I am still not sure that the needed focus has been brought yet.
In summation, the industry needs to start looking at the future much harder than it is today. Yes, it needs to build up strong expertise across verticals and it needs to ensure that the relationships are created and nurtured. But, that is now a basic requirement, not an objective. As for the individual firms, they tend to follow each other, which reduces the chances of any real innovation happening in the industry.
Its time for the individual firms to stop focusing on each other and start focusing on themselves. What do the 9-to-whatevers think?